Apple reportedly put pressure on a Taiwanese manufacturer of its popular MacBook Air, asking them to choose between building that Cupertinian laptop or the ASUS Zenbook.
According to a story in the Chinese-language Commercial Times (Google Translate), Apple has told the manufacturer, Pegatron, to "choose sides" – 選邊 – between …

Now I'm not really an Apple fan, more into the Microsoft offerings in general, but I hold no grudges against any company - and I really don't see what's wrong with this?!

If you're a defence contractor, doing work for a particular Government, that work is 'ring-fenced' (can't think of a better term). You aren't allowed to use the knowledge or ideas to assist a foreign Government to create similar technology.

That's just one example, but their are many instances of suppliers having to abide by similar arrangements. It's obvious that Apple had to do a lot of research with manufacturers to perfect the unibody construction. Pegatron could easily slip Asus a few hints to help them avoid similar problems that Apple may have encountered. So it's easy to see why Apple might be a little annoyed!

If Pegatron wants to profit off Apple products, then they must obey the terms Apple sets out. I'm not arguing that it is a wise business decision, there are plenty of pitfalls, but when Apple holds all the cards and supplies a massive chuck of your profits, it's a decision to consider...

It's illegal under the competition act in the UK for one thing. For sure you can insist on and enforce a non-disclosure agreement, but you absolutely can't make it a condition of doing business with you that a supplier or customer doesn't do business with someone else.

Twaddle. This is a simple matter of choice. Apple are perfectly free to take their business elsewhere and no doubt told Pentagron that is what they would do. Pentagron remain free to take the risk Apple might do so. There is no rule under UK competition law that limits Apple's freedom to choose another supplier. It's difficult to conceive of their being such law anywhere, because it would amount to a restriction on a companies freedom to choose its suppliers. There are many reasons Apple might wish to avoid doing business with a party who also works on competitors products. That's their choice.

@alexh2o

If you are a defense contractor and you are paid to provide a solution; yes a governemnt can prevent you from selling it elsewhere. If you have a product that you funded and developed, you can sell it to others, as long as there are not any export restrictions on place. See the difference, one you are paid to provide a solution and the other, you are selling a product. What Apple is doing is quite different. Apple made the design and contracts the building of it out. The manufacturer did not design the product and thus doesn't have the knowledge that Apple has in the design process. Just because you build it doesn't mean you have knowledge that can be shared. You don't think Acer hasn't bought a few iPads and disassembled them? All the manufacturer is doing, putting the various bits together and nothing more.

I appreciate the OP's sentiment

However it may be a supply problem and Apple might be of the opinion that they would be able to sell more product if they had sufficient supply. Their is a chance, albeit slight, that Apple, and by extension Pegatron, would benefit more if Pegatron would commit the additional manufacturing capacity toward building MacBooks (not to be confused with McBooks or Happy Meals).

Not illegal..

Though it should be. Sky used this tactic to destroy the satellite industry. Before they were big, they threatened Sat Shops. You were not allowed to sell competing kit if you wanted to be a Sky dealer. That is why most people are unaware that there are other birds in the sky that broadcast tv. They think that Sky is satellite TV. Try and buy a non Sky receiver in the high street and you'll see what I mean.

i quite agree. the story doesn't actually tell us what was said between the companies. it could well be that apple said "we're going to need X time more casing for the new macbook range" to which pegatron replied "we can't fill that order until after march because we're committed to producing X units for Asus" and apple answered "fine, in April, we'll add those X to our current order of Y... or we can take X+Y to another supplier"

there might not have been any specific threats, just standard business practice.

I know bugger all but I will have my say!

I know bugger all about the facts but you listen here to me, I think this is completely wrong! How can ( Who are they? Oh never mind! ), do this to another company?! With absolutely no knowledge of the legal system either here or indeed there, and certainly no idea about company law and standard business practices, I think this is totally wrong and very possibly illegal, although I haven't really got a bloody clue what I'm talking about! I just picked my legal knowledge of commercial law via some comments over at Ars Technica and Slashdot, so I don't know what I'm talking about!!!

Oh and I hate Apple/Microsoft/Samsung/Nokia/Linux/Uncle Tom Cobbley ( delete as applicable ) or whomever it is that we're all against this week!

@King Jack

Do you not see how those are different? Or are you just ignoring it?

On one hand you have Sky choosing who distributes their kit. I agree, that should be illegal because it's anti-competitive. It means that they have more receivers on shop shelves than competitors, so consumers have less choice.

On the other hand, you have Apple threatening to use another manufacturer. If they move to someone else, then it's not going to affect the amount of kit being produced, it's going to be the same amount of kit, for the same price, just manufactured by someone else. Why does it matter why they choose one manufacturer over another? What if they told a manufacturer that their prices were too high? Would that be as bad? It's essentially the same, it's just one company choosing one manufacturer because of certain criteria.

Look, if it was in a contract as an exclusivity deal, would you complain? Should there be no guarantee of exclusivity available? Is it unreasonable to broach this as a subject before spending money on drawing up lengthy agreements if it's a certain deal-breaker?

@Dave's Jubblies: No, under 'Merkin law

it is illegal for Apple to even ask for that. Apple can require firewalls to prevent their ideas being implemented by competitors, but the very act of asking a vendor not to make a product crosses the line of anti-trust territory.

Obey, and do what?

@alex2o

"If you're a defence contractor, doing work for a particular Government, that work is 'ring-fenced' (can't think of a better term). You aren't allowed to use the knowledge or ideas to assist a foreign Government to create similar technology."

Except Apple has no knowledge or ideas that are unique outside of packaging design. What would Pegatron share with their competition? How to make white boxes?

This is Apple threatening to take their toys and go home, no more and no less.

"It's obvious that Apple had to do a lot of research with manufacturers to perfect the unibody construction. "

you think so, it only been around since 1912 you know.

prior art and all that jazz...

http://en.wikipedia.org/wiki/Monocoque

"Monocoque (pronounced /ˈmɒnɵkɒk/ or /ˈmɒnɵkoʊk/) is a construction technique that supports structural load by using an object's external skin, as opposed to using an internal frame or truss that is then covered with a non-load-bearing skin or coachwork. The term is also used to indicate a form of vehicle construction in which the body and chassis form a single unit. The word monocoque comes from the Greek for single (mono) and French for shell (coque). [1] The technique may also be called structural skin, stressed skin, unit body, unibody, unitary construction, or Body Frame Integral. A semi-monocoque differs in having longerons and stringers.[2]"

"Design and development

In 1912 Deperdussin introduced a monocoque racer using a fuselage made up of three layers of laminated strips of glued poplar veneer, which provided both the external skin and the main load-bearing structure.[5] This reduced drag so effectively it was able to win most of the races it was entered into.[6] This style of construction was copied, with some variations, in Germany by Albatros and others however it was prone to damage from moisture and delamination.[7]"

surely

Surely this is blatent monopolism at work here?

Didn't a company or several do this sort of thing including recently? Let's see, Microsoft with their browser? Not good enough how about the printer companies with ink cartridges? Still not recent enough? How about the Intel issue with forcing their CPU over AMD? Could be wrong but I can't see you guys over on the other side of the pond taking kindly to this and expect to be reading of a massive fine for crApple due to this. Unfortunately us merkins on the other hand will ignore the world opinion and side with the house that Jobs built^Wsued together because they are a "local" company who only operates with the beat intents....

As much as I hate Asus after they boned me out of roughly 7 months of a warranty seriously Apple do Fuck off already.

Actually Microsoft...

Do you actually have any documentary proof of this or is it a case of "everyone else says it, so it mush be true"?

The fact that no major PC manufacturer sells boxes with Linux pre-installed isn't proof that Microsoft is twisting their arms, it's proof that they don't think they can make money selling systems with Linux pre-installed.

@Al Jones - I can give you one hint here

No major OEM will accept to sell you a naked PC nor they will accept to reimburse you the Windows Voluntary Contribution (some are calling it a tax but that's not true) in exchange for returning back the unused copy of Microsoft OS. How is this for twisting arms ?

In case you need more info, you can educate yourself reading some juicy court documents from Comes vs. Microsoft.

You must be new to the Internet

Unless of course by 'everyone else' you mean technologists, lawyers and those close to the issues. It's pretty common knowledge.

"One of the ways Microsoft combats piracy is by advising OEMs that they will be charged a higher price for Windows unless they drastically limit the number of PCs that they sell without an operating system pre-installed." - http://www.justice.gov/atr/cases/f3800/msjudgex.htm#iiie

"Gassée says that Be was engaged in enthusiastic discussions with Dell, Compaq, Micron, and Hitachi. Taken together, preinstallation arrangements with vendors of this magnitude could have had a major impact on the future of Be and BeOS. But of the four, only Hitachi actually shipped a machine with BeOS pre-installed. The rest apparently backed off after a closer reading of the fine print in their Microsoft Windows License agreements. Hitachi did ship a line of machines (the Flora Prius) with BeOS preinstalled, but made changes to the bootloader -- rendering BeOS invisible to the consumer -- before shipping. Apparently, Hitachi received a little visit from Microsoft just before shipping the Flora Prius, and were reminded of the terms of the license." - http://www.kuro5hin.org/story/2001/10/23/13219/110

And of course, Microsoft are proving that they haven't changed one bit in 10 years - http://www.softwarefreedom.org/blog/2012/jan/12/microsoft-confirms-UEFI-fears-locks-down-ARM/

Actually

many of HP's business class computers can be ordered with FreeLinux pre-installed. You can even get FreeDOS on some models as well (such as the HP Pro 3405 Series MT for example.) I'm not an HP shill, just pointing it out...

Wow so because Apple says no one else can use their OS and several companies like dell have tried and failed to use Linux; Microsoft is at fault. Good sir i suggest you look at what you are saying. Microsoft may not be the fairest company in the world but they do not force others to use their OS only. HP tried to make their own OS using Palm but still choose to use Microsoft. The Behavior you are complaining about is almost exclusive to Apple.

Commercial suicide

Actually...

It's : "you can only make our gear, until such a time comes that you have no other contracts, and rely solely on us for income. At that point we will grind you profit to dust, and have you working on our products for nothing"

erm...

"Payback's a bitch."

You have absolutely no idea what spinning out means, you do?

Asustek effectively created Pegatron and allowed it to become an independant company. As can be seen by recent events, this has been good for Pegatron but less good for Asus... but there's absolutely no reason for Pegatron to take *revenge* on its parent.

Cause and effect

Maybe this is exactly why it is riding so high in stock value.

A company whose COO (now CEO) gets a priapic fit from seeing worker dorms on factory site is a good fit with the stock market. Victorian style indentured labor has been known to produce excellent margins and high quality goods. More than one world power grew to prominence around this concept.

re: How is this legal? Surel it isn't?

Legal where?

places like Taiwan and China have different legal definitions around this stuff.

It's likely to be fair game there.

What it is, is petty schoolyard crap. As for worrying about asus 'stealing' their design processes, aren't their zenbooks already rolling off the line? seems late to be making tweaks, plus judging from my Transformer Prime, they have the unibody finish down nicely!

As someone else pointed out, it seems to be a dirty trick to cost Asus some money retooling and maybe fear that they have made a competitive product.

worker dorms?

Nothing to get over-excited about. In Japan, and I assume in Asia generally, it isn't that uncommon for big companies to have subsidised dormitories for single workers. I lived in one myself for ten months and I've no complaints at all about it. I don't know the specifics of the story you're referring to, but I think that your criticism misses the mark somewhat. Maybe you should have spent a little longer to craft a better researched/presented argument...